The Customer You’ve Never Met

July 7, 2017

By John Bajorek

A new party has joined the purchase decision process. Enabled by data, digital assistants are poised to propel a new round of disruption coined “conversational commerce.”

Consumers will at once become more accessible through individualized, contextual, in-the-moment messaging and less accessible thanks to the rational algorithm-driven suggestions coming from their digital assistants. Brands will need to understand how to market to the likes of Alexa, Siri and Cortana– the customers they’ve never met – in order to reach their end consumer.

The Emergence of the Digital Assistant

Digital assistants can be primarily found on smartphones but also on computers and smarthome hubs like Amazon Echo and Google Home. Although Siri and her peers have been around for some time, 2015 was when voice assistants came into their own. For the first time more than half (55%) of users reported relying on voice assistants in the past 3 months. (MindMeld)

The adoption curve for digital assistants is steep. Tractica estimates that global users will almost quadruple from 500 million in 2016 to 1.8 billion in 2021. But adoption isn’t limited to tech-savvy Millennials. “Over one third of Echo revenue has come from members of Generation X in the past two years. Similarly, Baby Boomers made up 31 percent of all Echo purchases since January 2015,” (Slice Intelligence, Jan 24, 2017) This makes sense – compared to Gen Xers’ and Baby Boomers’ efforts to acclimate to the tiny keyboards of their smartphones, voice search is more natural, intuitive and efficient particularly now that word error rates (WER) in voice recognition have dropped.

Smarthome hubs are actually the smallest piece of the market but are garnering the most attention currently as Amazon continues to roll out line extensions (Echo Look and Echo Show) and the Early Adopters figure out how to incorporate the exploding ecosystem of smart devices into their daily lives. Exploding may be an understatement: VoiceLabs estimates there will be 24.5 million smart devices shipped in 2017, up from 1.7 million in 2015 and 6.5 million in 2016.

Amazon’s Head Start in the Home

Consumer Intelligence Research Partners estimates Amazon has sold 10.8 million Echoes, with 2.5 million sold in Q1 2017 alone. eMarketer recently published that Amazon Echo holds 70% of the Smarthome hub market and Google Home 24%. Meanwhile, 82% of the roughly 80 million Amazon Prime members are aware of Echo, and Amazon is also working with Whirlpool on smart washers, dryers and refrigerators leaving Amazon with plenty of runway toward becoming the gatekeeper to the purchases of millions of US households.

The battle for the home isn’t won yet, though, as 2017 will likely see Microsoft’s rollout of Cortana and Apple has just introduced a new device for Siri, the HomePod Speaker, which should be ready in time for the holidays this year.

The Race Toward Ubiquity

Amazon may have the head start in smarthome hubs, but it also recognizes the advantage that smartphone operating systems and apps have when consumers are away from home. Alexa is showing up in Ford, BMW and Hyundai automobiles and Google is working with Hyundai. Hospitality is also an emerging battleground, with Alexa and Siri both vying to be the voice-controlled platform for travelers. Marriott, Wynn Resorts and others are testing in-room devices.

Consumer Behavior Evolving at an Increasing Pace

Brands watched as consumers gradually adopted online shopping – more gradually than some pundits predicted. But not long after online shopping became a mainstream behavior, consumers started adopting mobile shopping at an exponential pace. Can we expect a similar pace with conversational commerce? Quite likely, provided that consumers realize the expected value of ease, convenience and efficiency promised by voice search and artificial-intelligence enabled digital assistants.

The adoption rate won’t be without hiccups and stalls as brands figure out how to deliver in this new platform as well as opportunities for on-going use. Leaders like Dominos, Starbucks and Uber have already introduced seamless voice transactions, but for others, voice app retention is a major issue as there is only a 3% chance a user will be active in the 2nd week after downloading an app. (Voice Labs, 2017) Figuring out their value proposition in this new platform will challenge brands for the next few years. Brands’ learning curves will be the predictor in who captures the opportunities created by this disruption in consumer behavior and who is left behind.

If unconvinced that consumers are on the cusp of new behaviors, we need only look to how consumers have become more comfortable with surrendering the thought process and decision-making for routine purchases. Consumers who don’t mind a small fee for the convenience of grocery pick-up/delivery services like Kroger’s Clicklist and Instacart are jumping on the bandwagon. Meanwhile, the meal kit category with the likes of BlueApron and HelloFresh is seeing a rash of new entries as consumers dabble in delegating meal planning and shopping. The trend isn’t limited to routine and lower-consideration purchases. Consumers have fallen in love with subscription services of all kinds, even those that offer style and product discovery (think Ipsy, StyleFix, or Birchbox.)

The New Dyadic Customer Journey

As consumers adopt voice as a new user interface, they’ll interact with the voice of a digital assistant or the voice of a brand, all powered by data and artificial intelligence. Suddenly, there’s another party to the purchase decision process. This party may decide that an ad isn’t relevant to a consumer based on past purchases, social media likes or reviews. This party may only share one response to a search inquiry. This party may remember a poor experience far longer than a consumer might, excluding a brand from a consumer’s consideration set far into the future.

“In the zero-UI future, searchers won’t be looking for a full page of potential choices – they’ll instead receive one answer said aloud to them by the digital assistant.” (iProspect Bing Digital Assistant whitepaper, 2017)

Suddenly, a consumer may be targeted more precisely and accurately than ever before – becoming more accessible to brands – while at the same time becoming less accessible due to brands’ poor data structuring or failure to adapt to this new way of interacting with consumers.

Unanswered Questions & Action Items

Many questions loom near for brand marketers and retailers as they rethink customer acquisition, experience and retention in this next round of disruption:

Will consumers behave more predictably and less impulsively due to the rational algorithms of their digital assistants? Or will the converse be true – greater impulsiveness tied to the blind faith and their new artificial brain?

How should we classify a regular consumer – are they loyal to our brand or set in a digital assistant-enabled habit?

How can brands prompt discovery or gain access to a consideration set?

How will consumers talk to us since voice searches tend to be in question form and be longer in length than typed searches?

How will digital assistants determine which products to share in response to an inquiry? Who will control/protect the ethical guardrails?

How do we sell products or experiences without the visuals or sounds that have been used in the past?

“The easier a digital assistant can access your brand’s information, the more likely it is to surface and repeat that information to interested individuals.” (iProspect Bing Digital Assistant whitepaper, 2017)